Cox Stretches Its Cable for Future Growth

A company better known for delivering MTV, CNN and the Movie Channel to homes is pushing into the business services market, offering high-speed network connections to government agencies.

Cox Communications Inc. of Atlanta has won contracts in the past year with two Air Force bases, the Oklahoma City offices of the General Services Administration and the city of Irvine, Calif.

The cable company plans to leverage the improvements it has made to its cable infrastructure to deliver high-speed networking and telecommunications services to government and business customers, said Sam Attisha, national accounts manager for government and education customers.

In 1999, the company did about $50 million in business services with government and commercial customers, double the 1998 figure, he said. Cox posted $1.7 billion in overall revenue last year.

Cox's stock price has ranged from $28.50 per share to $52 per share during the past 12 months. On Dec. 20, 1999, it closed on the New York Stock Exchange at $48.81 per share.

Cox began upgrading its residential cable systems after passage of the Telecommunications Act of 1996, so the company could begin offering consumers more channels and enhanced services, including Internet connections, Attisha said.

The high-speed networking connections Cox is offering government and commercial clients will use those enhancements, he said. "We have the network built, so we want to migrate to new services," he said.

The company has not set revenue goals for its government business, but it is exploring strategies, such as getting on the GSA schedule and partnering with systems integrators, Attisha said. He did not name any prospective partners.

Cox has set up cable networks in large areas, such as New England, and major metropolitan areas, such as Hampton Roads, Va., New Orleans, Oklahoma City, Orange County, Calif., Pensacola, Fla., Phoenix and San Diego. It wants to use these to go after government and commercial customers, Attisha said.

Because several of these areas have large Navy facilities, the Navy is a major customer Cox plans to pursue, he said. "We have a unique backbone for schools and government agencies that have facilities spread around a geographic area," he said.

Cox's cable networks densely crisscross the cities and towns the company has franchises in, Attisha said.

The company's aim is to provide high-speed connections among government facilities in a geographic area, and serve as the high-speed connection between an agency's telecommunications network in a particular city and nationwide networks provided by companies such as AT&T Corp. and MCI WorldCom, Attisha said.

For the company's $3.5 million, five-year contract with Langley Air Force Base in Hampton Roads, Cox built a fiber-optic digital communications system that will increase the speed and services available and save about $550,000 a year in efficiencies, he said. That contract was won in October 1998.

"They had a lot of dial-up lines that were costing them a lot of money," Attisha said.

Cox is doing similar work for Tinker Air Force Base in Oklahoma City under a $3 million contract it won in March 1999. The contract is to last five years.

Cox also has connected GSA's offices under a $5 million, five-year contract in Oklahoma City.

"What our customers like is that we have taken future growth into account," Attisha said.

One of Cox's strengths is providing a high-speed and high-bandwidth connection to nationwide telecommunications networks because Cox's networks are built on fiber optics and coax cable and not copper wires, said Jeanne Schaaf, an analyst with Forrester Research Inc., a market research company in Cambridge, Mass.

While the local telephone companies that Cox is competing with are increasing the amount of fiber optics they have in place, "Cox is so dense that we tell organizations that if access is an issue, you should check these folks out," Schaaf said.

Cox can provide high-speed access more quickly in remote locations because its cable lines are already in place, Attisha said.

For example, in Irvine, Cox connected 12 remote locations with the city's central office. Employees in the remote locations will have the same level of service and network connectivity as employees in the central office, Attisha said. The Irvine contract is valued at about $800,000 over five years.

"We're giving employees a lot more speed to get their work done faster and have a lot more access to information that they may need," said Jan Stinger, Irvine's information systems control administrator.

Another plus for Cox as it moves into commercial and government markets is its reputation, said James Goss, an analyst with the market research firm Barrington Research of Chicago.

"They have always paid a lot of attention to technology and customer relationships, and that is probably more important [in the government and commercial] environment than the home market," he said. Business: Cable television and high-speed Internet and telecommunications access